At G20 Summit, Obama Must Confront China’s Xi About Cybertheft

Like Beijing before the 2008 Olympics, the Chinese city of Hangzhou has been given an expensive facelift for the upcoming G20 Summit. China has reportedly spent an eye-opening $24 billion (160 billion yuan) to impress the world leaders who will be gathering there on September 4-5.

The host of the summit, Xi Jinping, can well afford throw around this kind of cash. In 2015, the Chinese Party-State’s unfair trading practices netted him and his one-party dictatorship a whopping $366 billion from the U.S. alone. China’s trade surplus with the U.S. may well surpass $400 billion in 2016, costing more Americans their jobs.

China’s ongoing cybertheft of America’s intellectual property, however, may be even more costly to the U.S. economy, especially over the long run. The loss of not only cutting-edge technology, but also blue-sky research into future technologies, could put even more of our industry at risk of succumbing to unfair competition from Chinese counterfeits.

After all, some of the dollars that Americans spend buying cheap, Chinese-made goods actually come back to the U.S. in the form of investments in real estate and business. (Although, come to think of it, the Native Americans also traded land for trinkets. How well did that work out for them?) Not so the theft of our intellectual property, which is a total loss.

This cybertheft of American economic secrets is big business. The Director of the Counterintelligence and Security Center at the National Security Agency, William Evanina, estimates that cyberattacks costs the U.S. economy $400 billion a year, and that China is behind 90 percent of these attacks. Over the past two decades, the total amount of intellectual property stolen by Chinese state hackers totals in the trillions of dollars. Millions of American jobs have been lost as a result.

The U.S. also conducts cyber espionage against China, of course, but our intelligence operations follow a kind of spy-versus-spy model. They are focused on gathering information in cyberspace that is potentially useful to American national security or foreign policy decision makers. We don’t attempt to pilfer China’s economic secrets and hand them over to private American companies.

By way of contrast, China is engaged in a total war, cyber-style, against America. It has armies of cyberwarriors, some reporting to the People’s Liberation Army, others reporting to the Ministry of State Security, hacking away day at night at the computer networks of American companies large and small. These cyberwarriors are constantly on the attack, and nothing is off limits for them. They steal government secrets from federal agencies, military secrets from defense contractors, and economic secrets from Fortune 500 companies.

It is no exaggeration to say that every American industry, from telecommunications to pharmaceuticals, has been penetrated. That giant sucking sound is terabytes of data being vacuumed up by Chinese state hackers. Everything from engineering documents and chip designs, to manufacturing processes and future business plans, is being whisked away to China at the speed of light. We might call this the “China Cyber War.”

Instead of trying to out-research and out-innovate the United States, China is content to let us spend billions to research and innovate—and then steal the results. This approach is not only cheap; it is relatively easy as well. As the Chinese say, you can “toss out a brick and get back jade.” A single successful hack, which may only take a cyberwarrior a few days at a computer terminal to execute, can net many millions.

Yet cybersecurity does not even seem to be on the President’s agenda at the upcoming G20 meeting. Although Obama and Xi Jinping will have a private dinner during the summit, Deputy National Security Advisor Ben Rhodes has confirmed that the agenda will focus on Global Warming and the Trans-Pacific Partnership. (Neither appears likely to happen any time soon, of course, but this won’t stop the posturing.)

When Obama last met with Xi Jinping in September 2015, the Chinese Communist Party supremo pledged that China would not engage in or knowingly support cybertheft of intellectual property for commercial gain. Obama, sounding tough, said about such thefts: “It has to stop.”

In the months since, however, China has not only continued to prosecute its economic cyberwar against the United States, it has ramped up its attacks. According to Fred Fleitz of the Center for Security Policy, it has reorganized and consolidated its cyberarmies, increasing both their funding and their functionality.

Should we be surprised that the Communist Party leader has failed to keep his word? I am sure that he believes as an article of faith that, as Sun-Tzu said, “All warfare is deception,” and that the very nature of cyber warfare will enable his country to keep getting away with its criminal activity.

After all, the cyber battle space is tailor-made for China to launch stealth attacks against its enemy, the United States. Beijing can strike from remote servers located anywhere in the world—disabling a power grid, robbing a bank, or stealing a company’s trade secrets—all while leaving behind little or no trace of a crime, much less evidence that could be used to prove that it was responsible for the attack.

So, despite Xi Jinping’s promise to rein in this kind of cyberwarfare, the deliberate targeting of American companies continues. And so far no one in the Obama administration, and certainly not Obama himself, has called out the Chinese leader for breaking his word. China will continue to engage in criminal cyberattacks against the U.S. as long as it can escape real consequences for doing so.

Before he gets on Air Force One to fly to Hangzhou, someone should remind President Obama that China continues to carry out crippling cyberattacks against U.S. corporations. Despite his earlier tough talk, however, I suspect that he will not be willing to take the tough actions that will be required to put a stop to the China Cyber War.

We need a president who does not substitute talk for action, one who understands the fundamental principle of war: If your enemy is at war with you, then you are at war, whether you want to be or not.

And we are losing the China Cyber War.

Steven W. Mosher is the President of the Population Research Institute and the author of The Bully of Asia (forthcoming).